Bombardier delivered 238 aircraft in 2013, orders drop 19 per cent

MONTREAL - Bombardier Aerospace continued to feel the effects of a sluggish global economy last year as business jet deliveries missed company forecasts and net new orders fell dramatically.

Bombardier said Monday it delivered 238 aircraft in 2013, missing its own forecast on lower-than-expected business jet shipments, and received 19 per cent fewer orders during 2013.

The manufacturer said it delivered a total of five more aircraft than in 2012 but shipped 10 fewer business aircraft than it had predicted for the year. The miss was mainly prompted by a transition to updated Learjet 70 and 75 planes which went into service in the fourth quarter.

Deliveries of commercial aircraft met its guidance and were higher 10 per cent higher than last year.

Bombardier (TSX:BBD.B) said it delivered 180 business jets, 55 commercial aircraft and three amphibious aircraft. That compared to 179 business jets, 50 commercial aircraft and four water bombers in 2012.

It received 388 orders net of cancellations, compared with 481 booked in 2012. Last year's total included 305 net orders for business planes, 81 for commercial planes and two water bombers. In 2012, it received orders for 343 business jets, 138 commercial planes and amphibious aircraft.

"The global economy has remained persistently sluggish, and with its recovery taking longer than originally anticipated, 2013 continued to be a challenging year for aviation," stated aerospace president and chief operating officer Guy Hachey.

"Despite this difficult environment, we put in a solid performance overall. We had a successful order intake that included firm orders from a broad base of customers located in both traditional and emerging markets."

Flexjet and VistaJet ordered business jets while American Airlines, the Ilyushin Finance Co. of Russia and Iraqi Airways ordered commercial aircraft, including the new CSeries plane whose entry-into-service has been delayed again until the second half by 2015.

Hachey said Bombardier's strategy of diversifying its geographic reach gained momentum in 2013 with orders from customers based in Africa, Asia-Pacific, China, the Middle East and Russia.

Last year's business jet deliveries included 29 Learjets, 89 Challengers and 62 large Globals. In 2012, it delivered 39 Learjets, 86 Challengers and 54 Globals.

Shipments of regional jets nearly doubled to 26 from 14, while deliveries of Q400 turboprops decreased 19 per cent to 29 from 36 in the prior year.

Commercial aircraft orders fell 41 per cent last year as the number of CRJs ordered decreased to 30 from 73 planes and Q400s dropped to 17 from 50. CSeries orders increased to 34 from 15 in 2012.

Although deliveries were below Bombardier's prior guidance, they exceeded analyst forecasts for Learjet and Q400s.

Analyst Benoit Poirier of Desjardins Capital Markets said investors had already expected a shortfall in deliveries because of the impact of the U.S. government shutdown last year on certification of the Learjet 70/75 planes.

"As a result, we view the current delivery numbers as positive," he wrote in a report.

Poirier said Bombardier received net orders for 252 planes in the fourth quarter, including 115 firm order from Flexjet. That's up from 184 planes a year earlier when VistaJet ordered 56 planes.

However, analyst Cameron Doerksen of National Bank Financial lowered his target price for Bombardier shares by 25 cents to $4.75 after reducing his earnings estimate to 44 cents per share in 2014 and introducing an estimate of 42 cents per share in 2015.

Doerksen described the 208 business jet deliveries in the quarter and year as a "solid performance" even though the numbers were lower than the prior year.

"We have no concerns over Bombardier's backlog for business jets and even its backlog of regional aircraft should support higher production rates in 2014 (especially for CRJs.)," he wrote.